South Africa’s multibillion-rand public infrastructure programme, including those projects that would unlock key mineral resources and exports, were given strong emphasis by President Jacob Zuma in his State of the Nation address, delivered in Parliament on Thursday evening.

Effectively declaring 2012 the year of infrastructure delivery, Zuma used the occasion to unveil a list of five major geographically focused programmes, as well as a host of infrastructure initiatives designed to support health and education, the upscaling of information and communication technologies, as well as to accelerate regional integration.

He also committed to convening a ‘Presidential infrastructure summit’ to discuss the implementation of the plan with potential investors and social partners.

The plan itself would be overseen by the Presidential Infrastructure Coordinating Commission (PICC), which was established in September under the leadership of Zuma and his deputy, Kgalema Motlanthe, and which also included Ministers, premiers and the metropolitan mayors.

“We will use the project management expertise gained during the 2010 FIFA Soccer World Cup to make this project a success,” Zuma said, highlighting the role those infrastructure projects played in helping South Africa weather the effects of the ‘Great Recession’ of 2008 and 2009.

The projects prioritised by the PICC included those that would be implemented by State-owned companies (SoCs), such as Eskom and Transnet, as well as national, provincial and local government departments. “These have been clustered, sequenced and prioritised into a pipeline of strategic integrated projects,” the President said.

Many of the priority projects were designed to improve the performance of South Africa’s mining industry, which stood out among its global peer group as having failed to capitalise on the precrisis commodities boom.

However, Congress of South African Trade Unions general secretary Zwelinzima Vavi lamented the fact that social infrastructure and public transport did not receive the same level of attention in the address as did the business-supporting programmes. That said, the "general thrust" of prioritising infrastructure investment was positive, Vavi added.

In a transparent bid to reassert government’s prevailing mining policy, which had been brought into question by a nationalisation debate within the governing African National Congress, Zuma said government remained committed to the creation of “a favourable and globally competitive mining sector, and to promote the industry to attract investment”.

“The mining industry, one of the job drivers in the New Growth Path, plays a critical role in the socioeconomic development of the country. As part of addressing the triple challenge of poverty, inequality and unemployment, government has developed a beneficiation strategy, which seeks to provide opportunities in the downstream part of the minerals sector.”

The five geographically focused projects listed included:

• A plan to develop and integrate rail, road and water infrastructure, centred around the Waterberg and Steelpoort areas of Limpopo, to unlock coal, platinum, palladium, chrome and other minerals, as well as the stepped-up beneficiation of minerals.
• Improving the movement of goods through the Durban-Free State-Gauteng logistics and industrial corridor by prioritising a range of rail and port improvements, supported significantly by a R300-billion investment programme by Transnet over the coming seven years.
• A new ‘South Eastern node’, in the Eastern Cape, to bolster that province’s industrial and agricultural development and export capacity. Initiatives within the node would include logistics linkages with the Northern Cape and KwaZulu-Natal, the construction of a dam on the Umzimvubu river to support farming and the Mthatha revitalisation project. It would also embrace a new 16-million-ton-a-year manganese export channel through the Port of Ngqura.
• An initiative to expand the roll-out of water, roads, rail and electricity infrastructure in the North West, including the upgrade of ten priority roads.
• A range of projects on the West Coast, including the expansion of the Sishen-Saldanha iron-ore corridor to above 80-million tons. 

Zuma also unveiled plans to reduce port charges for exporters of manufactured goods by R1-billion and called on Eskom to find ways to moderate South Africa’s fast-rising power-price path.

"I have asked Eskom to seek options on how the price increase requirement may be reduced over the next few years, in support of economic growth and job creation and give me proposals for consideration. We need an electricity price path which will ensure that Eskom and the industry remain financially viable and sustainable, but which remains affordable especially for the poor," Zuma said.

Speaking to e-TV after the speech, Public Enterprises Minister Malusi Gigaba said a report on ways to moderate the price path would be presented to the President within four weeks.

The emphasis given to infrastructure would have found broad-based support within business. But scepticism remained about the ability of government departments, as well as the SoCs, to actually implement their programmes.

In a joint industry statement released earlier, the South African Federation of Civil Engineering Contractors and Consulting Engineers South Africa said they were “appalled” by the recent admission by government that municipalities had underspent R12.4-billion set aside for municipal infrastructure projects.

Business Unity South Africa (Busa) underlined the point by stating that “2012 must be a year of game change for implementation”. Busa added that there was a need to accelerate the implementation of policies and programmes that have been agreed and funded.

These concerns were echoed by Democratic Alliance leader Helen Zille who said the focus on infrastructure-led growth could not be faulted. But she said the speech failed to offer an honest assessment of why 'grand plans' continually failed in implementation - a failure which she put down to red tape, corruption and cadre deployment.

Standard Bank’s chief economist Goolam Ballim said that, in light of serious external and domestic economic headwinds, concerted efforts were required to raise public sector investment to levels where South Africa once again began sustaining a minimum yearly investment rate of 25% of gross domestic product (GDP).

The multiplier effect, he said, would be significant not only in buttressing long-term growth in the context of otherwise low growth levels, slowing household spending and rising inflation, but also in creating the conditions for the private sector to begin raising their own levels of investment.

At the 25% levels, the State’s cumulative investment programme could be more than R1.5-trillion over a three-year cycle, which Ballim said could help underpin GDP growth rates of 4%.